Which of the following is not an explanation of intra-industry trade?
A) economies of scale
B) the product cycle
C) overlapping demands
D) factor proportions
E) All of the above

Question

Quizplus · Accepted Answer

Intra-industry trade refers to the exchange of similar products belonging to the same industry. The concept is not explained by factor proportions theory, which is more about inter-industry trade based on countries' relative endowments of factors of production. In contrast, economies of scale, the product cycle, and overlapping demands all provide explanations for why countries would engage in intra-industry trade, such as trading different models of cars or electronics.

Which of the Following Is Not an Explanation of Intra-Industry